The Hindu Business Line : We can't afford to put capitalism on autopilot mode

In The Twilight of the Nation State, Prem Shankar Jha outlines the evolution of capitalism and its influence on social, economic and political institutions. Kees van der Pijl, in Global Rivalries from the Cold War to Iraq, explores how capital accumulation has pushed societies on the perimeter to become `rival economic units', open to exploitation by bigger powers. Two books to arm yourself with this weekend, even as storms rage on in the conflict zones, says D. MURALI.

Mumbai blasts have already triggered off tough talk across the border. Meanwhile, warship INS Mumbai is evacuating Indians from Beirut, a battle-bruised city that is being further pockmarked by bombs.

In these circumstances, it may need a hefty dose of optimism or deep philosophy to still think that the world is moving steadily towards `order, peace, and prosperity'. Watch out, we are heading `towards increasing disorder and violence,' cautions Prem Shankar Jha in The Twilight of the Nation State, from Vistaar (www.indiasage.com).

Despite such dismal prediction, Jha isn't a doomsayer. He concedes that technology, more particularly IT, has the power to transform the world for the better. "But this will not happen automatically, under the spur of market forces," argues Jha. Deliberate human intervention is needed, he reasons, "to slow down the pace of economic transformation sufficiently to give the social, political and international institutions upon which civilisation depends time to adapt."

Thesis of Jha's book is that capitalism can't be put on autopilot mode, because the system has `a profound asymmetry' at its very core. Markets can restore economic equilibrium after each external shock, but "they are inherently blind to the distributive effects of their own working," such as widening income differences, redundancy, business failures and accentuated conflicts. The author studies the `four cycles' of capitalism, tracing right from the origins in the twelfth century, "when wind- and water-mills spread throughout the European continent in a very short span of time." The first cycle saw the rise of `industrial capitalism' in Venice and Florence, and `finance capitalism' in Genoa, with the city-states serving as the `containers' of capitalism. This phase lasted for about 170-220 years.

Then came the Dutch phase for about 120-180 years, when Amsterdam was the financial hub of the Europe-centred world economy. The third cycle was `state-based capitalism', a phase in which the world saw the rise of the East India Company and the power of the English Crown, a phase that prevailed for 110-130 years. The fourth was the American century, seeds of which were sown during the Great Depression, opines the author. "British capitalism was running out of steam because it was no longer capable of the structural changes that were needed to make further growth possible."

Capitalism became too large for the `container' that the island country could offer. The current cycle is the fifth, into which the world was pushed, by the oil price shock of the 1970s, an expansion from nation to the globe. "In each of its cycles of expansion, capitalism has gone through its own internal evolution, from early to mature to late capitalism," observes Jha. "The early phase is typically one of increasing disorder. In it capitalism sets about destroying the social, economic and political institutions."

The middle phase was mature enough to allow new institutions to develop, reflecting "society's attempt to harmonise the interests of the gainers and losers from competition." In late capitalism, however, these have become fossilised! We now see the eroding of institutions without creating anything else in their place, laments Jha. The destruction of the institutions of the nation state takes place in `a political vacuum where there is no authority to moderate its pace or guide its direction.'

It is financial surpluses that find outlets in wars, reasons the author. However, this is not the first time that the world is wrapped in turmoil. "Growing disorder, eruptions of violence and decades of insecurity have accompanied each rebirth of capitalism in the past."

Jha finds the roots of conflict to capitalism's tendency to burst its container. The current cycle views almost every institution, `from the welfare state to the nation state', as an obstacle to the growth of global capitalism. "Globalisation is, therefore, anything but a `return to the future'."

The book ends with a bleakly named chapter, `Towards darkness'. It paints the industrialising world thus: At the leading edge are `island enclaves and states like Hong Kong and Singapore' which are `held out to the rest of the developing world as the examples to be emulated'; the trailing edge has the failed and failing states, which are facing the exclusion from the global economic system; and the middle — comprising populous countries such as China, India, Indonesia, Russia, Brazil, Argentina, Mexico and Turkey — faces an uncertain fate.

If the desire to homogenise and control the world is an irrational sentiment, so is terrorism. Evolving through phases, global terrorism has become increasingly dangerous, notes Jha. The new global terrorism is "as much an attack upon the untrammelled sovereignty of the nation state as are the military interventions in the name of human rights." Eerily, "with no alternative global state system yet in sight, interventionism and terrorism will feed off each other to accelerate the descent into chaos."

Societies pushed to contender roles

Without breaking that theme, let's launch ourselves into Global Rivalries From the Cold War to Iraq, by Kees van der Pijl, another book from Vistaar. Does capital not unify the globe, asks the preface. The answer is in the negative. Because capital accumulation came with "the unique constellation of a self-regulating, transnational social space in and from which to expand — an `internal extraterritoriality' in which it can thrive."

Dangerously, societies on the perimeter have been forced into adopting contender postures, as `rival economic units', open to exploitation, though by the bigger powers.

The book begins with a chapter on `Fractures and faultlines in the global political economy', and concludes with `Global state of emergency'. The final chapter speaks of `the new barbarians', as pictured by the `Evil Empire' rhetoric and the more recent pronouncements such as `Axis of Evil'.

Pijl writes that the strategic objective of the ruling classes of the heartland has all along been to dispossess the contender state classes and integrate the rival societies into the expanding West. "Once a contender state collapses, the West extends its helping hand to the ascendant pro-Western forces."

Israeli attacks find repeated mention in the book. "For the Jewish state, Iraq was always the more immediate enemy, and in a daring air raid in 1981 the Israelis destroyed the country's one nuclear reactor before it could be started up," one learns from a chapter on `energy conflicts in the post-Soviet era'.

Read also about Israel's proxy wars with Syria and Iran in 1982. "It also used the occasion to strike at Palestinian refugee camps in Lebanon, driving Yasser Arafat from the country in August, and allowing Phalangist militias to massacre hundreds of civilians." Attack came from `Hezbollah, the Shia party formed with aid from Iran' against the US-French force stationed in Beirut, narrates Pijl. "Striking twice in 1983, they killed several hundred US soldiers (and 58 French) in October. To avoid further losses, the Pentagon withdrew the remaining troops."

The `War on Terror' is a case of neo-liberal globalisation project turning in on itself, "just as the medieval crusaders in their closing stages became obsessed with internal heresy," says the author.

As example, he cites the US Patriot Act of October 2001, which specifically targets computer and Internet crime. "Its provisions have little or nothing to do with the suicide attacks on the Twin Towers and the Pentagon."

The raucous call to arms we have become used to is forceful. But we can't possibly pay heed to it, because the call is `to combat a largely imaginary enemy of the West's own making,' says Pijl. To him, more urgent issues that merit attention are "the destruction of the planet's biosphere and the descent of human society into irresponsibility and barbarity."

Two books to arm yourself with this weekend, even as storms rage on in the conflict zones.

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We can't afford to put capitalism on autopilot mode